Barack Obama, "Joe the Plumber" and Taxes

I have struggled with the question of what Barack Obama really believes (see here and here). As the election gets closer (and is already over for all those early voters out there), the question is now becoming not only what does Senator Obama believe, but also what would he and the rest of the Democrats do if he is elected President.

I have been giving this question some thought, and until earlier this week, I had come to a tentative, and perhaps hopeful, conclusion, that went something like this: Senator Obama is obviously a very smart person. As Robert Samuelson said (and as I quoted earlier): "[Obama] strikes me as a super-successful graduate student; the brightest, quickest, most articulate guy in the seminar." (Samuelson did, however, go on to say: "In his career, [Obama] has advanced mainly by talking and writing – not doing – and may harbor a delusion common to the well-educated: that he can argue and explain his way around any problem.")

Senator Obama is also a very ambitious person, as can be seen in his running for President this year, even though he had only been elected to national office in 2004. He felt he could win, and he was not going to wait for anybody, even Hillary Clinton. Similarly, in 1995 he was selected as the designated successor by an incumbent Illinois state senator who had decided she wanted to run for higher office. When she changed her mind at the last minute and decided to run for re-election, he got her thrown off the ballot for not having enough valid signatures on her nominating petitions, not a very gracious act but certainly ambitious.

His ambition, however, seems to be more of the careful kind than the rebellious kind. This has meant, for example, that once in office he has tended to go along with party leaders. I don’t think anybody ever considered him a rebel in the Illinois Senate (or anywhere in Chicago). Similarly, once he got to the U.S. Senate, he voted with his party. According to an analysis by Congressional Quarterly, Senator Obama voted with his party on 29 out of 30 contested votes. (See here.) He eventually tended towards the more liberal side of the Democratic party in the Senate (by 2007 one survey had him being the most liberal Democrat in the Senate), but he didn’t challenge his party on anything significant.

Which raises another point (which I commented on here). Not only has he not been a rebel vis-à-vis his party, but he has also always seemed to take positions which have been closely in line with those of his constituents, either those he represented or those he was hoping to represent. That makes understandable the positions he took on abortion while in the Illinois State Senate, positions which he has softened recently. This is also true of his position against the Iraq war in 2002. If you lived in Hyde Park in 2002, the courageous position would have been to support the war, not oppose it.

His positions in the United States Senate have reflected the same two things. As I said above, he went along with his party; he was not a rebel in any sense of the word. But his positions also reflected what he wanted to do next, which was to run for President. When he started running for President, his constituency became the primary and caucus voters in the Democratic Party. Going along with the party and voting on the liberal side of the party appealed perfectly to his new target constituency. This also explains things like his answer to a question in the YouTube debate in July of 2007 when he said that he would meet, without preconditions, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea during his first year in office. That is what the Democrat activists wanted to hear, and that is who he was appealing to at the time. (That answer may also reflect the conceit that Robert Samuelson was talking about when he said that Obama "may harbor a delusion common to the well-educated: that he can argue and explain his way around any problem.")

But then, as I discussed in more detail here, once Senator Obama effectively clinched the Democratic nomination in June, his positions started to change. He moved to the center – because that is where the voters are for the presidential race.

So, what did I think Barack Obama would do as President? A couple of things. First, in some areas, areas that might not too important to him, he would let the Democratic Congress have its way. And so we would likely see secret elections no longer required in union representation contests. We might see a new "fairness doctrine" established for TV and, especially, radio that would hobble conservative talk radio.

In other areas, however, I was thinking that the Democratic leaders in Washington might be surprised. Barack Obama had gone along with the party, deferred to party leaders, while in the Illinois Senate and the U.S. Senate. Party leaders might have expected that this would continue. But once Barack Obama became "Mr. President", my thought was that he would surprise them. He was the President and he was going to decide. That might have resulted in a little shock and awe among certain Democrats on Capitol Hill, but my thought was that Barack Obama was going to take charge in those areas that mattered most to him.

And I had some hope that things might not be as bad as some conservatives expected. I saw him backing off on some of his criticisms of NAFTA. I saw that his economic advisers are pretty mainstream. Maybe his economic positions would not be as bad as some feared. He had, after all, told the Wall Street Journal that if the economy was in bad shape, he might delay his tax increases on the rich.*

I didn’t know for sure, and I certainly preferred John McCain over him (and Sarah Palin over Joe Biden), but I was perhaps a little less fearful than I had been earlier in the campaign.

And then came the most famous plumber since G. Gordon Liddy: "Joe the plumber."

The story of Joe Wurzelbacher, i.e., Joe the plumber, needs little explanation. Most people know it by now. At an Obama rally in Ohio last Sunday, Wurzelbacher told Senator Obama that he planned to buy a small plumbing business that would make more than $250,000 a year. Wurzelbacher asked, "Your new tax plan is going to tax me more, isn’t it?", and Obama said it would. Wurzelbacher then said: "I’ve worked hard. … I work 10 to 12 hours a day and I’m buying this company and I’m going to continue working that way. I’m getting taxed more and more while fulfilling the American Dream."

Senator Obama responded: "It’s not that I want to punish your success. I want to make sure that everybody who is behind you, that they’ve got a chance for success, too. My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. I think when you spread the wealth around, it’s good for everybody."

"Spread the wealth around"; the government "spreading the wealth around". That is scary. Before last Sunday, I had been hopeful that Senator Obama might be more moderate on taxes and economics than some conservatives predicted. I hoped that maybe a President Obama would listen to his economic advisers and back off from some of his scarier economic ideas.

But now I wonder if the real Barack Obama is not the "super-successful graduate student" who would listen to and learn from his economic advisers. Maybe the real Barack Obama is the Barack Obama who was a community organizer. Because "spreading the wealth around" is a community organizer idea.

This also brings back concerns about other comments Senator Obama has made on taxes. He talks about taxes as a matter of "fairness". "It is time for folks like me who make more than $250,000 to pay our fair share." "[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share." (What he has proposed is to have social security taxes apply not only to earnings up to the normal Social Security wage cap but also to earnings above $250,000. These people wouldn’t get a higher social security benefit. They would just pay more what they would otherwise get.) (Wall Street Journal, August 19, 2008)

When Charlie Gibson challenged Senator Obama on the fact that history shows increases in capital gains taxes result in a decrease in the amount of revenues actually collected by the government, Senator Obama said: "Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness." (Wall Street Journal, August 19, 2008)

Tax policy established by "fairness" is an ultimate community organizer principle. It is not a matter of figuring out the best and most efficient way to raise taxes to pay for government (which is what I think is best). It isn’t even a matter of using the tax code to try to achieve some specific policy goal by giving special deductions or credits to certain people (which I do not think is a good idea but which I understand). This is just a matter of raising taxes to take money away from those who you think have too much money and giving it to those who you think do not have enough.

I understand the impulse behind this idea. It is a great basis for charitable giving. I recommend it highly. But as a matter of tax policy, as a matter of government policy, it is a terrible idea. There is no objective standard on which to base the policy. It is purely subjective. This is not a proper tax policy. This is personal preference is masquerading as tax policy.

Even worse was Senator Obama’s comment about raising capital gains taxes as a matter of fairness, even if the government doesn’t get more tax revenue from doing so. This is just envy masquerading as tax policy.

All of this worries me for a couple of reasons (if not more). First, it is not going to work. Raising taxes in this way will discourage people from working, which will reduce the amount of taxes the government collects, which will unnecessarily increase the deficit. Raising taxes in this way will also slow the economy and slow economic growth. Our country will be poorer because of it.

Second, there can be no acceptable reason to raise taxes on people even though there is good historical evidence to show that doing so will ultimately mean government actually collects less taxes.

I had been hoping that Barack Obama did not believe in these things. I am now afraid I was wrong.

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* I apologize. I cannot find the cite for this statement, but I do remember reading it.